Comparing Financial Ratio Evaluation Between Two Companies Financing Essay

Comparing Financial Ratio Analysis Between Two Companies Financing Essay

A financial statement or the financial record is known as an official record of the economic activities of a person, a business, or any different entity. In the British English also including the United Kingdom company rule; a financial record is generally mentioned as a merchant account, even though the word “financial record” can be mostly used, usually by the accountants. In a business enterprise, all the related financial evidence, presented in a organized method and in an application that is really simple to copy and figure out by others, are called the economic declarations. They normally incorporate four basic financial declarations, escorted by a supervision analysis and discussion.

Statement of dollars flows: reports that shows the cash flow activities of a provider, normally its operation, funding and investing activities.

Balance sheet: that is likewise referred as the assertion of financial condition or posture, reports that show the business’s assets, ownership collateral, and the liabilities at a given period of time.

Statement of retained income: this explains the alterations in the retained earnings of a organization over its reporting period.

Income statement: this is referred to as a Loss and Profit statement, income reports of a company, income, and expenses over some time frame. Loss and Profit consideration will get information on the process of the enterprise. These include the various expenses and the sales that acquired through the dispensation state.

For the large organizations, these statements are often difficult and may add a wide-ranging group of notes to the fiscal statements and analysis and management dialogue. The notes are generally describing each item on the cash flow statement, harmony sheet, and income statement in more detail. All notes to financial declarations are considered an integral part of the financial declarations.

Two companies will be compared and contrasted. This will display the difference of everything between both these businesses. It shows the different income ane different income earned by these companies. It also demonstrates even different corporations have a lot of things that do not come in common.

FORMULA

TIME ENGINEERING BERHAD

WONG ENGINEERING CORPORATION BERHAD

Liquidity Ratios

Networking Capital=

Current Assets –

Current Liabilities

= 358618 – 113715

= 244903

= 51929026 – 1517900

= 50411126

Current Ratio=

_Current Assets__

Current Liabilities

358618 / 113715 =

3.15

= 51929026 / 1517900

= 34.21

Quick Ratio =

Current Resources – (Inventory+Prepaid Expense)

Current Liabilities

= 358618 – ( 72 + 35220 )

113715

= 358618 7 grade books – ( 35292 )

113715

= ( 323326 )

113715

= 2.843

= 51929026 –

( 19423010 + 175601 )

1517900

= 51929026 – ( 21179021 )

1517900

= 3721752.23

Assets Utilization Ratios

Accounts Receivable Turnover

( Net Credit Revenue +

Average Accounts Receivable)

= 256536 .

[ 64657 + (24970 / 2) ]

= 256536 .

( 64657 + 12485 )

= 256536

77124

= 3.32

N / A

Average Collection Period =

Accounts Receivable

Daily Credit Sales

= 24970 .

( 68643 / 365 )

= 24970

118.06

= 132.7

= 133 days

= 1777208 .

( 11995710 / 365 )

= 1777208

32864.96

= 54.08

= 54 days

Inventory Turnover Ratio =

Cost of Goods Sold

Average Inventory

= 64651 .

( 40964 / 2 )

= 64651

20482

= 3.16

= 63297596 .

( 19423010 / 2 )

= 63297596

9711505

= 6.52

Fixed Assets Turnover =

Net Sales .

Total Fixed Assets

= 999132

2248486

= 0.444

= 2370124 .

147201386

= 0.016

Leverage Ratio

Debt Ratio =

Net Sales .

Total Assets

= 999132

2248486

= 0.444

= 0.444 x 100

= 44.4 %

= 2370124 .

147201386

= 0.016

= 0.016 x 100

= 1.6 %

Equity Ratio =

Total Liabilities .

Stockholders’ Equity

= 1249165

959625

=1.301

= 15446858

129147162

= 0.120

Times Interest Received Ratio =

Earnings Before interest and Tax

Interest Expense

= 106497

7218

= 17.53

= 18 times

N / A

Profitability Ratios

Gross PROFIT PERCENTAGE =

Gross Profit

Net Sales

= 200887

999132

= 0.201

= 0.201 x 100

= 20.1 %

= 6900285

2370124

= 2.911

= 2.911 x 100

= 291.1 %

Return on Total Assets =

Net Income .

Average Total Assets

= 68643 .

( 2248486 / 2 )

= 68643

1124243

= 0.061

= 70197881 .

( 147201386 / 2 )

= 7019881

73600693

= 0.095

Return Common Equity =

Earning Available to Commons Stockholders

Average Stockholder Equity

= 39696

959626

= 0.041

N /A

Market Value Ratios

Earnings per Share =

Net Income-Preferred Dividends .

Total Common Shares Outstanding

= 24970

56490

= 0.442

N /A

Dividend Yield =

Dividend per Share

Market Price per Share

N / A

N / A

Conclusion

Those will be the following latest reviews of financial information of two different businesses. As what we can see above can be that WONG ENGINEERING CORPORATION BERHAD (WECB) has got better network and better cash flow compared to TIME ENGINEERING BERHAD (TEB). But both businesses will be from the same industries. Both of these corporations happen to be in the engineering field. They both sell goods regarding engineering.

By comparing these businesses we can evidently see which company is much more successful and which is not. As you can see that the amounts of WONG ENGINEERING CORPORATION BERHAD is very case analysis format high compared to TIME ENGINEERING BERHAD, but (WECB) has no profits at all. They have problems with loss. Despite the fact that (TEB) has low profits they do involve some profit at the end of your day. This makes it clear that amount isn’t enough to make a company successful; a enterprise needs skills to do so. Therefore the companies happen to be compared and contrasted.

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